Italcementi to benefit from Egypt export ban

Italcementi to benefit from Egypt export ban
Published: 01 October 2010

Analysts believe the expiry of an Egyptian ban on cement exports will have a decisively positive effect on Italian cement maker Italcementi ,which operates in Egypt via a subsidiary.

Egypt said it would not extend the ban on cement exports, which ended yesterday, a decision that could help stabilise cement prices.

Analysts at Mediobanca said the impact will be very favourable for Italcementi, which is a market leader in Egypt with a business that contributes 29% to its earnings before interest, tax, depreciation and amortisation (EBITDA).

Cement demand in Egypt rose 25% last year, mostly driven by residence construction projects for a growing population. Yet, demand has been slowing down this year. The Egyptian government said last month it planned to offer new licences for 12 cement production lines to raise production by 40% by 2015. The ban on exports was introduced in 2009 after a rise in demand caused volatility of prices.
Italcementi said last week Egypt was one of its priorities for investments in the next few years.

"Despite the still uncertain macroeconomic scenario, we appreciate the growing visibility and the gradual recovery of the sector," Mediobanca said.

The broker kept its "neutral" stock rating with a price target at EUR 8.00.